Remaining compliant with state and federal regulations can be one of the more confusing aspects of starting a business. In order to avoid administrative friction, it is important to have a thorough understanding of the practices needed to operate a legally compliant business.  As a general rule of thumb, it is important to familiarize oneself with the relevant laws and regulation as well as maintaining complete and up to date documentation in line with said laws and regulation.

Business Type

A good place to start would be deciding what type of business you want to open, as the type of business will determine the applicable federal, state, and local regulations. According to the Small Business Administration, corporations have the strictest requirements as well as the highest startup costs but also provide the greatest protection for its owners. LLCs have less strict requirements while sole proprietorships and partnerships have the least strict regulations but owners are personally liable in the event of bankruptcy or a lawsuit. Regardless of business type, it is always prudent and generally advised to maintain adequate and thorough documentation. 

Taxes

After registering the business with the state, it is necessary to obtain an Employment Identification Number for tax purposes. The type of taxes a business is responsible for depends on various factors but are generally determined by the type of business and state regulations. According to the IRS, all businesses must pay income taxes as well as file an annual income tax return. Individuals who work for themselves must pay a self employment tax and if the business has employees, then the owner must pay various employment taxes.

Remaining Compliant

The Small Business Administration lists the various federal licenses and permits necessary to operate a business across a multitude of industries. It is also necessary to have the required state and local licenses and permits. In moving forwards with the business, it is crucial to document all tax filings, financial transactions and contracts, employment documents, intellectual property documents, and to provide reports to the necessary agencies in order to maintain permits and licences.